Irongate Performance Fund, LLC v. Alpha Balanced Fund, Lllp
342 Ga. App. 93
| Ga. Ct. App. | 2017Background
- Alpha Balanced Fund (Alpha) invested in Irongate Performance Fund (the Fund) and timely requested a full redemption on Sept. 23, 2010.
- Alpha waited the required period; Fund Manager (Irongate DPS/Manager) suspended all redemptions Dec. 22, 2010, and terminated the Fund in May 2011 while winding up.
- During winding up, distributions were to be made first to creditors and then equitably among members; suspended withdrawal requests were expressly excluded from priority as "creditors."
- Alpha received partial distributions ($430,000 of a claimed $1,008,229.78) and sued for breach of contract, breach of fiduciary duty, conversion, and unjust enrichment.
- Trial court granted Irongate summary judgment on all counts; Alpha appealed. Irongate separately sought dismissal of Alpha’s appeal for untimely transcript filing; trial court denied dismissal and that denial was also appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appeal should be dismissed for untimely transcript | Alpha: transcript filing delay excused; reporter had been asked and Alpha paid; delay not caused by Alpha | Irongate: transcript not filed within 30 days; dismissal appropriate | Trial court did not abuse discretion — delay excusable and not caused by Alpha; appeal not dismissed |
| Whether suspension/termination breached Operating Agreement (vested redemption/right to priority) | Alpha: its redemption right had vested and should have priority in winding up; suspension/termination breached Sec. 4.2 and 7.2 | Irongate: Operating Agreement expressly allowed suspension and termination (Sec. 4.2, 7.1–7.2); liquidity problems and option structure justified suspension | Held for Irongate — contract permitted suspension/termination; evidence showed liquidity issues and no contractual right to demand allocation from reference entity |
| Whether Manager breached implied covenant of good faith | Alpha: Manager acted in bad faith/self-interest by suspending redemptions and prioritizing other members | Irongate: actions were contractually authorized, unanimous decision, and responses to liquidity problems; no evidence of conscious wrongdoing | Held for Irongate — no admissible evidence of arbitrary, unreasonable, or dishonest purpose; implied covenant claim fails |
| Whether fiduciary duty, conversion, or unjust enrichment claims survive summary judgment | Alpha: fiduciary duty breached; conversion for refusing to surrender vested funds; unjust enrichment | Irongate: fiduciary duties limited/exculpated by agreement; conversion claim duplicates contractual remedy; unjust enrichment not argued on appeal | Held for Irongate — fiduciary claim barred/unsupported; conversion fails absent independent legal duty; unjust enrichment abandoned on appeal |
Key Cases Cited
- In the Interest of D. M. C., 232 Ga. App. 466 (Ga. Ct. App.) (procedural standard for dismissing appeals for transcript delay)
- Welch v. Welch, 212 Ga. App. 667 (Ga. Ct. App.) (failure of court reporter to file transcript does not justify dismissal unless caused by appellant)
- Jackson v. Beech Aircraft Corp., 213 Ga. App. 172 (Ga. Ct. App.) (trial court discretion on delay causation and dismissal)
- VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606 (Del. Ch.) (summary judgment burdens when plaintiff bears trial burden)
- Nemec v. Shrader, 991 A.2d 1120 (Del. 2010) (limits on implied covenant and bad-faith claims where conduct is contractually authorized)
- SIGA Technologies, Inc. v. Pharmathene, Inc., 67 A.3d 330 (Del. 2013) (definition of bad faith in Delaware law)
- Kuroda v. SPJS Holdings, LLC, 971 A.2d 872 (Del. Ch.) (conversion claim cannot rest solely on breach of contractual duty)